MUMBAI, Mar 9: The Unit Trust of India (UTI) has pegged the interest rate for this year's first Institutional Investors Special Fund Unit Scheme (IISFUS) at 13.50 per cent.While the fund has set a target of Rs 1,000 crore for the scheme, it hopes to mobilise only Rs 800 crore owing to ICICI's bond issue which has pegged its coupon at 14 per cent.
The previous IISFUS scheme had offered a return of 12.75 per cent which means that this year's scheme is offering 75 basis points more.
The IISFUS scheme is being launched on March 23, while the Rs 400-crore ICICI bond issue is entering the market on March 16. Subscription to the two issues is likely to be open simultaneously, at least for a few days.
According to UTI sources, since both the schemes are offering assured returns for a five-year period, the only advantage that the IISFUS scheme would have would be on the tax front.
"We are definitely going to be hit by the ICICI issue but we are still hopeful of garnering about Rs 800 crore. Our target is ofcourse Rs 1,000 crore," said a UTI source.
The IISFUS scheme, which is open to financial institutions, trusts and societies, invests 80 per cent of its corpus in debt instruments and the balance 20 per cent in equity. According to sources, UTI is also planning to go in for an aggressive campaign to popularise its money-market mutual fund.
The open-ended mutual fund has been able to maintain a corpus of Rs 100 crore since its launch last year and offered an average 10 per cent rate of return during this period.
"There is a vast potential for this scheme. It has remained stable at the Rs 100-crore mark. As of now the profile of the investors has remained at high net worth clients. It offers a good opportunity to the savings account holders as well given the high liquidity and across-the-counter repurchase facility being offered," said a source.
This facility is provided through the UTI Bank branches. As of now, the facility is available through branches in seven cities. The Trust plans to extend this toall the 30 branches of UTI Bank before the end of the current financial year, which is June 30 in the case of UTI.
